Marketers monitor impact of Facebook data controversy

Facebook shares have dropped for a second day in a row following controversy over the alleged improper use of information on more than 50 million Facebook users.

The stock price is down almost 17 points from Friday as lawmakers in the U.S. and around the world are demanding answers.

Many advertising firms are closely monitoring the outcome of this controversy. Facebook is one of the biggest platforms for marketing companies right now, largely because the online platform helps advertisers target a very specific audience.

“Responsible marketers want to deliver a compelling message to a really targeted audience, they don't want to spam people, they don't want to deliver messages that aren't relevant,” Epicosity Digital Marketing Director Chris Kappen said.

The recent controversy stems from allegations that the research firm Cambridge Analytica improperly used data from 50 million Facebook users, generated through a third party professor’s personality test.

“Like which Harry Potter character are you, for example,” Kappen said. “Back in 2014, the people who made those apps would not only be able to collect information on those users that participate in the surveys, but also information on their friends as well.”

"We are unbelievably outraged and beyond disturbed at the allegations that data was misused or that our policies have been violated,” Facebook VP of Marketing Carolyn Everson said.

Facebook says it plans to launch a forensic audit and possible legal action against Cambridge Analytica.

“This data breach is a pretty big deal,” Kappen said. “Facebook has already been on the ropes with the way it handles its user data and the way it handles third parties.”

Local marketing firms are closely monitoring how this case could impact the future of digital advertising.

“I think this does leave the door open for newer competitors like Snapchat, or even Vero that came out recently, for them to come out take a position on protecting user data and providing a great social experience as well, so there's definitely some opportunities for new players to enter the game,” Kappen said.

When it comes to what information marketers and researchers can gather on Facebook, Kappen said it's not users’ identities or personal information, but more so their behavior. Kappen said Facebook users should be aware that any quiz or poll not generated by Facebook is likely designed to help companies learn more about you, your spending habits and political views.

This week, we also learned Cambridge Analytica, the research firm accused of improperly accessing this Facebook data, was hired by the Trump campaign and claims it helped the president win the 2016 election. The company’s CEO has been suspended for discussing bribery and entrapment.